The oil price crash is finally resulting in a big cut in production.
In a note Thursday, Deutsche Bank's Joseph LaVorgna notes that oil- and gas-well drilling production fell for the sixth straight month in March, according to the Fed's industrial production report.
Compared to a year ago, production is down -36.6%.
"While oil prices have since rebounded to around $55 per barrel and may be in the process of stabilizing around current levels, the plunge in prices over the past eight months is finally resulting in a massive pullback in energy-related production," LaVorgna wrote.
Data from the Energy Information Administration earlier this week showed that oil production in the Bakken and Eagle Ford regions will slow down month-over-month in April.
And EIA data out Thursday showed analysts' consensus forecast for oil inventories last week was nearly 10 million barrels more than the 1.9 million actually reported.
The data supported a rally in West Texas Intermediate crude oil prices to a year-to-date high above $55 a barrel.
Here's LaVorgna: "As we can see from the chart below, the plunge in energy production is occurring in lagged response to the aforementioned fall in oil prices. We have found that the year-over-year change in oil prices is most closely correlated with changes in energy production when the former series leads by five months. This means that if it turns out that oil prices bottomed last month, production should begin to stabilize around September. Of course, between now and then, energy production and capital spending (capex) will be extremely weak."
Deutsche Bank